PEC's profit slides by S$6m to $20m

Blame it on competitive pricing.

According to a release, the Group’s revenue increased by 11% from S$130.0 million in Q2 FY2012 to S$144.4 million in Q2 FY2013. This was mainly due to an increase from project works in Singapore.

As revenue increase, the Group’s cost of sales increased by 19% from S$104.0 million in Q2 FY2012 to S$124.3 million in Q2 FY2013. The increase was mainly due to increase in labour cost as a result of increase in headcount and general inflation in wages.

The Group’s gross profit decreased by S$6.0 million from S$26.0 million in Q2 FY2012 to S$20.0 million in Q2 FY2013 as a result of gross profit margin decrease from 20% to 14%.

The decrease in gross profit margin was mainly due to competitive pricing and cost pressure resulted from the operating environment in both project works and maintenance sectors.

Other operating income increased by S$1.4 million from S$0.5 million in Q2 FY2012 to S$1.9 million in Q2 FY2013. This was mainly due to gain on disposal of asset held for sale (leasehold land and fabrication facilities).

Other operating expenses increased by S$4.4 million from S$8.0 million in Q2 FY2012 to S$12.4 million in Q2 FY2013. The increase was mainly due to increase in cost associated with more headcount.

Some of the significant cost increase relates to accommodation, employee’s welfare, transport expenses, uniform and safety items. Higher depreciation and freight and forwarding charges also contributed to the increase in other operating expenses.

The Group’s profit attributable to shareholders decreased by S$0.5 million from S$3.1 million in Q2 FY2012 to S$2.6 million in Q2 FY2013. This was mainly due to decrease in Group’s gross profit and increase in other operating expenses which offset by increase in other operating income and decrease in share of loss from share of joint ventures.